1 of 2 Falcon Corporation
[40 minutes] 11023
Information pertaining to the Falcon corporation's budget for the year 2001 is presented below.
Falcon produces one product using one type of raw material. All labor costs are paid in the
quarter of production. The company has no debt and uses the LIFO method for inventory costing.
Falcon Corporation Account balances on December 31 2000
Accounts receivable (Net) $ 107,000
Raw materials 900 lbs. $ 4,500
Finished goods 200 units $ 30,000
Accounts payable $ 2,000
Taxes payable $ 2,000
Desired end-of-quarter balances
Raw Materials as a fraction of following quarter's production needs 0.50
Finished goods as a fraction of following quarter's sales 0.25
Unit manufacturing costs Needed Unit Price Total
Material lbs. at price 2 lbs/unit $ 5.00 $ 10
Direct Labor Hours at rate 4 hrs/unit $ 15.00 $ 60
Variable Overhead 4 hrs/unit $ 12.00 $ 48
Total unit variable manufacturing cost $ 118
Unit Selling Price $ 210
Fixed factory overhead per quarter excluding depreciation (cash) $ 24,000
Depreciation for machines used in production (per quarter) $ 6,000
Selling and administrative expense (cash): Fixed Expenses per quarter: $ 10,000
Variable cost per unit sold: $ 37.00
Income tax rate (Taxes paid in cash in the following quarter) 30%
Portion of purchases paid: In Purchased Quarter: 75%
In next quarter: 25%
Portion of Sales collected: In Quarter of Sale: 30%
In next quarter: 70%
Unit Sales Forecast: 1st quarter: 800 2nd Quarter: 1,200
for 2001 3rd Quarter: 800
Prepare the following tables
Production budget, 2001 Quarter : 1 Quarter: 2
1 Units to be produced
2 of 2 Falcon Corporation
Raw Materials budget Quarter 1, 2001
2 Cost of purchased materials
3 Increase in Accounts receivable
4 Increase in Accounts payable
5 Unit product cost of goods manufactured in quarter 1, 2001
Income Statement Quarter 1, 2001
6 Net Income
Cash Flow Statement Quarter 1, 2001
7 Cash flow from operations